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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






2. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






3. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






4. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






5. Occurs when LRAC is constant over a variety of plant sizes






6. Exists if a producer can produce more of a good than all other producers






7. The ability to set the price above the perfectly competitive level






8. Ei = (%dQd good X)/(%d Income)






9. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






10. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






11. A firm that has market power in the factor market (a wage-setter)






12. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






13. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






14. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






15. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






16. Entry of new firms shifts the cost curves for all firms upward






17. Ed = 1






18. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






19. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






20. AFC = TFC/Q






21. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






22. The practice of selling essentially the same good to different groups of consumers at different prices






23. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






24. Ed = 0 - no response to price change






25. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






26. Product demand - productivity - prices of other resources - and complementary resources






27. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






28. 0 < Ei < 1






29. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






30. Models where firms are competitive rivals seeking to gain at the expense of their rivals






31. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






32. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






33. Two goods are consumer substitutes if they provide essentially the same utility to consumers






34. Demand for a resource like labor is derived from the demand for the goods produced by the resource






35. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






36. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






37. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






38. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






39. The marginal utility from consumption of more and more of that item falls over time






40. The total quantity - or total output of a good produced at each quantity of labor employed






41. A good for which higher income decreases demand






42. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






43. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






44. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






45. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






46. The additional cost incurred from the consumption of the next unit of a good or a service






47. Total product divided by labor employed. APL = TPL/L






48. ATC = TC/Q = AFC + AVC






49. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






50. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry